If you’re not running a sole proprietorship, lawsuits against your business aren’t automatically “stayed” by your personal bankruptcy filing. In most instances, a bankruptcy filing, through the power of the automatic stay, halts any lawsuit against you and your business or prevents a threatened lawsuit from being filed in court. But there are a few exceptions to this rule; situations in which the automatic stay would not apply. In these cases, a creditor’s lawsuit could continue in spite of your bankruptcy filing. Because stopping such a lawsuit is likely one of the reasons you’re filing bankruptcy, it’s extremely important to …
Are you struggling financially in your business? You may have a couple bankruptcy options available to you. Chapter 7 is usually reserved for those companies that are struggling so badly they cannot stay afloat. The business is dissolved, assets are liquidated, and any proceeds from the sale are distributed between shareholders and creditors. Chapter 11 bankruptcy, on the other hand, is filed when the business owner wants to save his company. This solution is referred to as reorganization bankruptcy. The business is allowed to remain open while completing the bankruptcy process. Learn more about business bankruptcy here.
The US Bankruptcy Code is designed to protect both debtors and creditors. The court will not allow you to pick and choose which debts are worthy of repaying and which are not.
When filing bankruptcy, be mindful of how you use your credit cards and other accounts. Don’t let frivolous spending jeopardize your chance to wipe out debt and get a fresh start.